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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-3
(AMENDMENT NO. 1)
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE
SECURITIES EXCHANGE ACT OF 1934
AND RULE 13e-3 (Section 240.13e-3) THEREUNDER)
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AMERICAN PAGING, INC.
(Name of the Issuer)
AMERICAN PAGING, INC.
API MERGER CORP.
TELEPHONE AND DATA SYSTEMS, INC.
(Name of Person(s) Filing Statement)
COMMON SHARES, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
02882K10
(CUSIP NUMBER OF CLASS OF SECURITIES)
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LeRoy T. Carlson, Jr. (312) 630-1900
President and Chief Executive Officer
Telephone and Data Systems, Inc.
30 N. LaSalle Street, Suite 4000, Chicago, Illinois 60602
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Person(s) Filing Statement)
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WITH COPY TO:
James G. Archer (212) 906-2000
Sidley & Austin
875 Third Avenue
New York, New York 10022
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This statement is filed in connection with (check the appropriate box):
a. / / The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. / / The filing of a registration statement under the Securities Act of
1933.
c. /x/ A tender offer
d. / / None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies.
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This Amendment No. 1 to the Rule 13e-3 Transaction Statement on
Schedule 13E-3 (this "Amendment") relates to the offer by API Merger Corp., a
Delaware corporation ("Purchaser") and a direct wholly owned subsidiary of
Telephone and Data Systems, Inc., an Iowa corporation ("TDS"), to purchase
all outstanding Common Shares, par value $1.00 per share (the "Common
Shares"), of American Paging, Inc., a Delaware corporation (the "Company), at
a price of $2.50 per share, net to the seller in cash, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase dated
February 18, 1998 (the "Offer to Purchase") and in the related Letter of
Transmittal (which together with the Offer to Purchase constitute the
"Offer").
All capitalized terms used in this Amendment without definition
have the meanings attributed to them in the Schedule 13E-3.
ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION
Items 6(a), (c) and (d) are hereby amended and supplemented as follows:
The information set forth under "THE TENDER OFFER--9. Financing of the
Offer and the Merger" of the Offer to Purchase is hereby amended and
restated to read in its entirety as follows:
The total amount of funds required by Purchaser to consummate the
Offer and the Merger and to pay related fees and expenses is estimated to
be approximately $10 million. TDS will ensure that Purchaser has
sufficient funds to acquire all of the outstanding Common Shares pursuant
to the Offer and the Merger. TDS will provide such funds from its working
capital or from existing credit facilities. No decision has been made
concerning which of the existing credit facilities, if any, will be
utilized. Such decision will be made on such dates as funds are required
to consummate the Offer and the Merger and to pay related fees and
expenses.
ITEM 8. FAIRNESS OF THE TRANSACTION
Item 8(b) is hereby amended and supplemented to add the following
information:
In reaching its determinations that the Merger Agreement and the
transactions contemplated thereby were fair to the Public Shareholders, the
Special Committee reviewed with its financial advisor, PaineWebber, the
historical market prices and trading activity for the Common Shares and
compared such data with comparable data of specified Paging Comparable
Companies. As further described in the Offer to Purchase under SPECIAL
FACTORS -- Opinion of the Financial Advisor to the Special Committee",
based upon a comparison of multiples of total enterprise value (as defined
therein) to various measures of earnings and units in service, PaineWebber
applied the relevant Paging Comparable Companies' multiples to various
measures of the Company's latest twelve months revenues and derived an
implied range of equity values for the Company of $0.00 to $2.50 per
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Common Share. As also described therein, PaineWebber analyzed premiums paid
to non-control shareholders in publicly-disclosed business combinations for
the period January 1, 1994 through February 6, 1998 and, based on closing
stock prices one day, one week and four weeks prior to the December 23,
1997 announcement by TDS of its offer to acquire the Common Shares, derived
fully diluted equity values of $2.24 to $2.56 per Common Share.
Although historical trading values for the Company's Common Shares
ranged from $10.00 to $4.63 in 1996 and from $5.13 to $1.31 in 1997, both
the Special Committee and the Board believed that such historical trading
performance was not a reliable indicator of current value of the Common
Shares in light of the declining financial performance of the Company, its
current financial condition, questionable ability to obtain further
financing and poor prospects. The Special Committee did not consider net
book values or liquidation value to be relevant measures of value. As
shown by its consolidated financial statements, the Company's liabilities
exceeded its assets at each of December 31, 1996 and 1997, and book values
at all relevant dates have been increasingly negative. With regard to
liquidation values, neither the Special Committee nor the Board believed
that sale of the Company on a piece-meal or liquidation basis would yield
values as great as that available from combination with a strategic
partner. As noted above, the Special Committee sought and received
confirmation from TDS that it was not willing to consider a transaction
which would allow the Public Shareholders to continue to participate in the
paging business by retaining an interest in the TSR Wireless venture.
Item 8(c) is hereby amended and supplemented to add the following
information:
The Board, including the Special Committee, believes that the Offer
and the Merger are procedurally fair despite the fact that the Merger is
not structured to require the approval of a majority of the Public
Shareholders. In reaching this conclusion, the Board and the Special
Committee took account of the other factors relevant to procedural fairness
as described above, including the composition of the Special Committee, its
retention of independent legal and financial advisors, its deliberations
and the active arm's length bargaining between the Special Committee and
TDS. In light of the presence of such factors, the Special Committee and
the Board believed that procedural fairness had been achieved without
requiring approval of a majority of the Public Shareholders as an
additional condition. Moreover, the Board and the Special Committee
believed that the current serious financial situation of the Company, and
the significant doubts about its ability to fund its ongoing operations as
a stand-alone entity, made it unwise to create a further condition which
might prevent the Company from proceeding with the transaction with TSR
Paging as described in the Asset Contribution Agreement.
As noted in the Offer to Purchase under "SPECIAL FACTORS--Position
of TDS and Purchaser Regarding Fairness of the Offer and the Merger", TDS
considered the factors enumerated by the Special Committee in supporting
its recommendation to the Board of the Company, including its conclusion
that the Offer and Merger was procedurally fair despite
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the fact that the Merger is not structured to require the approval of a
majority of the Public Shareholders. In reaching this conclusion, TDS
and the Purchaser took account of the other factors relevant to
procedural fairness as described under "SPECIAL FACTORS--Fairness of the
Offer and the Merger" of the Offer to Purchase, which information is
hereby incorporated herein by reference. Neither TDS nor the Purchaser
believes that the achievement of fairness required approval of a
majority of the Public Shareholders, particularly in light of the fact
that, in the view of the Board of Directors of TDS, as described in the
Offer to Purchase, the value of the Company does not exceed its
outstanding indebtedness and the likelihood that the Company would not
be able to continue as a stand-alone entity should the transaction with
TSR Paging not occur.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
Item 10 is hereby amended and supplemented as follows:
The information set forth under "SPECIAL FACTORS--Beneficial Ownership
of the Securities of the Company--Security Ownership of the Company by TDS,
Purchaser and Certain Beneficial Owners" of the Offer to Purchase is hereby
supplemented and amended by adding the following:
A Schedule 13D was filed with the Commission by Gabelli Funds, Inc.
("GFI"), Gabelli Associates Fund ("Gabelli Associates"), and Gabelli
Associates Limited ("GAL") and Mario J. Gabelli with respect to 409,300
Common Shares which represents approximately 5.4 percent of the
outstanding Common Shares. Pursuant to such Schedule 13D, GFI has sole
voting and dispositive power with respect to 271,100 Common Shares,
Gabelli Associates has sole voting and dispositive power with respect to
130,200 Common Shares and GAL has sole voting and dispositive power with
respect to 8,000 Common Shares.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE
ISSUER'S SECURITIES
Item 11 is hereby amended and supplemented as follows:
The information set forth under "THE TENDER OFFER--8. Certain
Information Concerning Purchaser, TDS and The Voting Trust" of the Offer to
Purchase is hereby incorporated herein by reference.
The information set forth under "THE TENDER OFFER--8. Certain
Information Concerning Purchaser, TDS and The Voting Trust" of the Offer to
Purchase is hereby amended and supplemented by adding the following
information:
The Voting Trust holds TDS Series A Common Shares and was created
under an Agreement, dated June 30, 1989, as amended (the "Voting Trust
Agreement"), to facilitate
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long-standing relationships among the trust's certificate holders. The
five trustees of The Voting Trust (the "Trustees") hold and vote the TDS
Series A Common Shares in accordance with the terms of The Voting Trust
Agreement. Under the terms of The Voting Trust Agreement, the Trustees,
except as otherwise specifically provided, possess and are entitled to
exercise all of the rights and powers of owners of the TDS Series A
Common Shares deposited in The Voting Trust. Except as otherwise
provided in the Trust Agreement with respect to certain transactions,
such Series A Common Shares are to be voted as a unit in accordance with
the six-vote majority of the Trustees. A "six-vote majority" requires
the affirmative vote by the Trustees holding no fewer than six votes.
Four of the Trustees, who are currently directors of TDS, have two votes
each, and the remaining Trustee has one vote.
Pursuant to the terms of The Voting Trust Agreement, the Trustees
are instructed to use their best judgment to select suitable directors.
TDS has a twelve person Board of Directors and four of the five Trustees
are directors of TDS; however, The Voting Trust Agreement does not
require the Trustees to elect any specified persons as directors.
As a result of the TDS Series A Common Shares held in The Voting
Trust representing 51.4% of the voting power of the combined TDS Common
Shares and the TDS Series A Common Shares and four of its Trustees
serving as directors on the Board of Directors of TDS, The Voting Trust
may be deemed to control TDS and indirectly the Company.
ITEM 16. ADDITIONAL INFORMATION
Item 16 is hereby amended and supplemented as follows:
The information set forth in the first paragraph under "THE TENDER
OFFER--12. Certain Conditions of the Offer" of the Offer to Purchase is
hereby amended and restated in its entirety as follows:
12. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other
term or provision of the Offer or the Merger Agreement, Purchaser shall
not be required to accept for payment or pay for any Common Shares
tendered pursuant to the Offer, and may terminate or amend the Offer and
may postpone the acceptance for payment of, and payment for Common
Shares tendered if (i) immediately prior to the expiration of the Offer
the Asset Contribution Agreement Condition is not satisfied or (ii) at
any time on or after February 11, 1998 and prior to the expiration of
the Offer and prior to the acceptance of the Common Shares, any of the
following events or facts shall have occurred:
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ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
Item 17 is hereby supplemented and amended by adding the following
exhibits which were previously incorporated by reference:
(b)(1) Opinion of PaineWebber Incorporated, dated February 10, 1998
(attached as Schedule III to Exhibit (d)(1)).
(c)(1) Agreement and Plan of Merger, dated as of February 11, 1998,
among TDS, Purchaser and the Company.
(c) (2) Asset Contribution Agreement, dated as of December 22, 1997,
among TDS, TSR Paging, Inc. and TSR Wireless LLC.
(c)(3) Option Agreement, dated as of December 22, 1997, between TDS and
TSR Wireless LLC.
(c)(4) Restated Certificate of Incorporation, as amended, of the
Company.
(c)(5) The Voting Trust Agreement, dated as of June 30, 1989, with
respect to TDS Series A Common Shares.
(c)(6) Exchange Agreement, dated as of January 1, 1994, between the
Company and TDS.
(c)(7) Revolving Credit Agreement, dated as of January 1, 1994, between
the Company and TDS.
(c)(8) Amendment to Revolving Credit Agreement, dated March 5, 1997 and
effective January 1, 1997, between the Company and TDS.
(c)(9) Amendment to Revolving Credit Agreement, dated January 13, 1998,
between the Company and TDS.
(c)(10) Intercompany Agreement, dated as of January 1, 1994, between
the Company and TDS.
(c)(11) Registration Rights Agreement, dated as of January 1, 1994,
between the Company and TDS.
(c)(12) Employee Benefit Plans Agreement, dated as of January 1, 1994,
between the Company and TDS.
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(c)(13) Amendment to Revolving Credit Agreement, dated February 27,
1995, between the Company and TDS.
(c)(14) Amendment to Revolving Credit Agreement, dated August 10, 1995,
between the Company and TDS.
(c)(15) Amendment to Revolving Credit Agreement, dated December 31,
1995, between the Company and TDS.
(c)(16) Amendment to Revolving Credit Agreement, dated April 15, 1996,
between the Company and TDS.
(c)(17) Amendment to Revolving Credit Agreement, dated August 2, 1996,
between the Company and TDS.
(c)(18) Amendment to Revolving Credit Agreement, dated November 13,
1996, between the Company and TDS.
(c)(19) Amendment, dated as of November 20, 1992, to the Voting Trust
Agreement with respect to the TDS Series A Common Shares.
(c)(20) Amendment, dated as of May 9, 1991, to the Voting Trust with
respect to the TDS Series A Common Shares.
(d)(1) Form of Offer to Purchase, dated February 18, 1998.
(d)(2) Form of Letter of Transmittal.
(d)(3) Form of Letter from Credit Suisse First Boston Corporation to
Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(d)(4) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to clients.
(d)(5) Form of Notice of Guaranteed Delivery.
(d)(6) Form of Guidelines for certification of Taxpayer Identification
Number on substitute form W-9.
(d)(7) Summary Advertisement as published in the Wall Street Journal on
February 18, 1998.
(d)(8) Form of Joint Press Release dated February 18, 1998 issued by
the Company and TDS.
(d)(9) Letter to Company Shareholders, dated February 18, 1998.
(e) Summary of Stockholder Appraisal Rights and Section 262 of the
Delaware General Corporation Law (attached as Schedule IV to Exhibit (d)(1)).
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, each of
the undersigned certifies that the information set forth in this Amendment is
true, complete and correct.
Dated: March 17, 1998 API MERGER CORP.
By: /s/ LeRoy T. Carlson, Jr.
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Name: LeRoy T. Carlson, Jr.
Title: President
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ LeRoy T. Carlson, Jr.
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Name: LeRoy T. Carlson, Jr.
Title: President
Signature Page to Amendment No. 1 to Schedule 13E-3
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment is true, complete
and correct.
Dated: March 17, 1998 AMERICAN PAGING, INC.
By: /s/ Terrence T. Sullivan
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Name: Terrence T. Sullivan
Title: President
Signature Page for Amendment No. 1 to Schedule 13E-3
EXHIBIT INDEX
Exhibit No. Exhibit Description
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(c)(1) Agreement and Plan of Merger, dated as of February 11, 1998,
among TDS, Purchaser and the Company.
(c)(2) Asset Contribution Agreement, dated as of December 22, 1997,
among TDS, TSR Paging, Inc. and TSR Wireless LLC.
(c)(3) Option Agreement, dated as of December 22, 1997, between TDS
and TSR Wireless LLC.
(c)(4) Restated Certificate of Incorporation, as amended, of the
Company.
(c)(5) The Voting Trust Agreement, dated as of June 30, 1989, with
respect to TDS Series A Common Shares.
(c)(6) Exchange Agreement, dated as of January 1, 1994, between the
Company and TDS.
(c)(7) Revolving Credit Agreement, dated as of January 1, 1994,
between the Company and TDS.
(c)(8) Amendment to Revolving Credit Agreement, dated March 5, 1997
and effective January 1, 1997, between the Company and TDS.
(c)(9) Amendment to Revolving Credit Agreement, dated January 13,
1998, between the Company and TDS.
(c)(10) Intercompany Agreement, dated as of January 1, 1994, between
the Company and TDS.
(c)(11) Registration Rights Agreement, dated as of January 1, 1994,
between the Company and TDS.
(c)(12) Employee Benefit Plans Agreement, dated as of January 1, 1994,
between the Company and TDS.
(c)(13) Amendment to Revolving Credit Agreement, dated February 27,
1995, between the Company and TDS.
(c)(14) Amendment to Revolving Credit Agreement, dated August 10,
1995, between the Company and TDS.
(c)(15) Amendment to Revolving Credit Agreement, dated December 31,
1995, between the Company and TDS.
(c)(16) Amendment to Revolving Credit Agreement, dated April 15, 1996,
between the Company and TDS.
(c)(17) Amendment to Revolving Credit Agreement, dated August 2, 1996,
between the Company and TDS.
(c)(18) Amendment to Revolving Credit Agreement, dated November 13,
1996, between the Company and TDS.
(c)(19) Amendment, dated as of November 20, 1992, to the Voting Trust
Agreement with respect to the TDS Series A Common Shares.
(c)(20) Amendment, dated as of May 9, 1991, to the Voting Trust with
respect to the TDS Series A Common Shares.
(d)(1) Form of Offer to Purchase, dated February 18, 1998.
(d)(2) Form of Letter of Transmittal.
(d)(3) Form of Letter from Credit Suisse First Boston Corporation to
Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(d)(4) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to clients.
(d)(5) Form of Notice of Guaranteed Delivery.
(d)(6) Form of Guidelines for certification of Taxpayer
Identification Number on substitute form W-9.
(d)(7) Summary Advertisement as published in the Wall Street Journal
on February 18, 1998.
(d)(8) Form of Joint Press Release dated February 18, 1998 issued by
the Company and TDS.
(d)(9) Letter to Company Shareholders, dated February 18, 1998.